Correlation Between Victoria Insurance and Sanurhasta Mitra

Can any of the company-specific risk be diversified away by investing in both Victoria Insurance and Sanurhasta Mitra at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Victoria Insurance and Sanurhasta Mitra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Victoria Insurance Tbk and Sanurhasta Mitra PT, you can compare the effects of market volatilities on Victoria Insurance and Sanurhasta Mitra and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Victoria Insurance with a short position of Sanurhasta Mitra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victoria Insurance and Sanurhasta Mitra.

Diversification Opportunities for Victoria Insurance and Sanurhasta Mitra

-0.57

Correlation Coefficient

Victoria Insurance  Sanurhasta Mitra

Excellent diversification

The 3 months correlation between Victoria and Sanurhasta is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Victoria Insurance Tbk and Sanurhasta Mitra PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanurhasta Mitra and Victoria Insurance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Victoria Insurance Tbk are associated (or correlated) with Sanurhasta Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanurhasta Mitra has no effect on the direction of Victoria Insurance i.e., Victoria Insurance and Sanurhasta Mitra go up and down completely randomly.

Pair Corralation between Victoria Insurance and Sanurhasta Mitra

Assuming the 90 days trading horizon Victoria Insurance Tbk is expected to under-perform the Sanurhasta Mitra. But the stock apears to be less risky and, when comparing its historical volatility, Victoria Insurance Tbk is 6.25 times less risky than Sanurhasta Mitra. The stock trades about -0.02 of its potential returns per unit of risk. The Sanurhasta Mitra PT is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  6,000  in Sanurhasta Mitra PT on December 24, 2024 and sell it today you would earn a total of  8,800  from holding Sanurhasta Mitra PT or generate 146.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Victoria Insurance Tbk  vs.  Sanurhasta Mitra PT

Victoria Insurance Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victoria Insurance Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Victoria Insurance is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Sanurhasta Mitra

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sanurhasta Mitra PT are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sanurhasta Mitra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Victoria Insurance and Sanurhasta Mitra

The main advantage of trading using opposite Victoria Insurance and Sanurhasta Mitra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victoria Insurance position performs unexpectedly, Sanurhasta Mitra can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sanurhasta Mitra will offset losses from the drop in Sanurhasta Mitra's long position.

The idea behind Victoria Insurance Tbk and Sanurhasta Mitra PT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.